Investors prepared for another volatile week as European governments rushed to prop up their own failing banks Sunday and U.S. congressional leaders, fresh off passing a massive financial rescue package, prepared to probe the failure of government regulations to prevent an unprecedented credit crisis continuing to spread around the world.

Germany -- Europe's second largest economy -- on Sunday negotiated a $69 billion bailout deal for a major real estate lender and said it would follow Ireland and Greece in guaranteeing all private bank accounts.

Italian bank Unicredit announced plans to raise as much as $9 billion in new capital, and the Belgian government Sunday arranged for French bank BNP-Paribas to take over what was left of the failed Dutch giant Fortis.

Back in the United States, details about how the Treasury will implement the $700 billion bailout are still unclear. What is certain is that the nation's housing policy and financial industry will face greater federal oversight.

Rep. Barney Frank, D-Mass., chairman of the House's Financial Services Committee, said next year Congress will seek a regulatory overhaul he likened to the New Deal.

`SERIOUS REFORM'

''We were the EMTs rushing to the rescue of an economy that suddenly found itself choking, but now we have to perform more serious reform,'' Frank said.

On Monday, the House Oversight and Government Reform Committee, chaired by Rep. Henry Waxman, D-Calif., will hold hearings on the causes and effects of Lehman Brothers' bankruptcy and on the $85 billion bailout of the giant insurer American International Group.

That committee and others will hold more hearings this month on hedge funds, credit rating agencies, the role of regulators in the run-up to the crisis and a class of derivatives known as credit default swaps. AIG held huge amounts of credit default swaps, which act as insurance against bond defaults.

The battle lines are already emerging for next year's fight. Industry lobbyists will push to consolidate the numerous financial regulatory agencies, similar to a proposal outlined by Treasury Secretary Henry Paulson earlier this year. They want the Federal Reserve to focus on ''systemic risk,'' or the risk that individual banks pose to the larger financial system. Currently, regulators focus too much on individual banks in isolation, said Scott Talbott, a lobbyist for the Financial Services Roundtable.

Business groups also will push to loosen accounting standards that they blame for deepening the current crisis.

EXISTING RULES

Some consumer groups, meanwhile, argue that structural changes to the financial regulatory system aren't as important as having regulators enforce existing rules more strictly.

If regulators had cracked down on abusive lending practices in the mortgage industry years ago, much of the current meltdown could have been avoided, said Travis Plunkett, legislative director for the Consumer Federation of America.

The bailout of German firm Hypo Real Estate and similar moves around the world are the latest sign that the troubles of U.S. banks, which have all but paralyzed credit markets, are affecting other countries.

Banks' hesitation to lend to one another and to many businesses and individuals is the consequence of the bad mortgage debt that the financial rescue is supposed to sweep up. But it's unclear how quickly financial institutions will be able to hand that debt to the U.S. government and convince the markets they are healthy again.

WALL STREET

Wall Street looked to continue the volatility of last week when trading resumed Monday. Stock index futures declined by more than 1 percent late Sunday, pointing to a lower open.

Doug Roberts, chief investment strategist at ChannelCapitalResearch.com, said the steps taken by governments abroad are welcome because a broad response, not simply the U.S. bailout, is needed to help steady the world's financial system.

Roberts thinks bringing lasting calm to credit markets and financial institutions will take longer to work out than many observers predict.

On Tuesday, Fed Chairman Ben Bernanke is scheduled to speak on the prospects for the economy and the financial markets.

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